Taxation

Taxation

Introduction

It is pretty axiomatic to say that taxation is such a thorny issue . For not only is it an abstract concept appropriately discussed in studies relative to Economics , it is also - even more so in fact - a policy which affects almost every household of this country . In a manner of speaking , people live perpetually haunted by taxes . Whether one decides to answer a phone-call or go to the gasoline station to fill up the tank , or whether one receives his monthly salary or simply decides to switch on the

light , one would surely find oneself taxed in ways more than one . The issue is thorny precisely on account of the relative burden it imposes on the people . That being said , it is only by right of mere logic to claim that any socio-political and economically driven community cannot do away with such a scheme of revenue generation however divisive or sensitive its ensuing issues may appear

Taxation and Its Impacts on an Economy

A tax is fundamentally defined as a charge usually of money imposed by authority on persons or property for public purposes (Merriam-Webster , 1995 ,

. 1208 . Most economists try to supply further nuance in the term by calling its direct effect as tax incidence ' - i .e , the way its burden ultimately is borne and its work effort , savings , commodity prices , factor prices , resource allocations , and the compositions of production and consumption (Samuelson Nordhaus , 1989 ,

. 798 . Since taxes are imposed on either individuals and firms , or goods and services , the determination of the relative effects of tax incidence on the general economic climate of a particular country is crucial for any study of economics

Two researches can be cited as a way to concretely demonstrate the above-cited contention . The first study , conducted last year by Tuerck Bachman , Titch and Rutledge , focused on the incidence of taxes levied on the communication services of this country . The scope of the authors study encompasses an inquiry into the varied facets of the Communication Services namely , voice , video and Internet access services delivered over telephone wires , and cable TV lines (Tuerck , et . al , 2007 ,

br 1 and its goal is to obtain all of the information regarding local state , and national taxes and fees imposed on consumers ' and thereby determine the differences in the taxes being paid for by individuals from different States (p . 33

The study reveals a couple of important findings : first , on average , the taxes being levied directly on to consumers for the above-said services stands at 20 .77 on a monthly average (p . 3 second , that communication taxes and fees are very high compared with general sales taxes (which are ) imposed on other goods ' and that households can save at least 125 .76 annually if taxes on Communication Services were only levelled at par with the general sales taxes on clothing and other household products (p .3 and third , that high taxes which people pay for Communication Services make it more difficult ' for middle and...